''We have to see the market sentiments, which has to improve,'' he said adding that the system has liquidity as the bank credit offtake was not satisfactory despite a cut in the prime lending rate effected recently. ''Hence, the bank will have to opt for a deposit rate cut'', as otherwise the interest margin would see an impact, he added. The rate cut has to follow. The bank had early this month cut its PLR by 25 basis points to improve the sentiments.
On inflation, he said the bank was prepared for a five per cent inflation, though it was now contained at around 4.3 per cent.